George Lawlor (Wexford, Labour)

Yes, Paschal's new pastures.

Certainly, this is a win-win scenario. Looking at the statistics, every working day this year, an Irish company has been sold into foreign ownership. If you contrast that with the UK’s situation, ten companies per week transfer to employee ownership trusts. The very simple reason they do that is because the taxation situation is much more favourable in that regard. There is only one company in Ireland that has decided to dodge the tax pitfalls – not the tax, but the tax pitfalls – and work around it. It is called Wolfgang Digital, owned by Alan Coleman. That is the only company at this point in time that has decided to enter an employee ownership trust. To date, he has reported an increase in productivity and a much greater interest among the workforce in terms of the company itself.

The famous John Lewis company in the UK is an employee ownership trust, EOT. That is an example of the type of company that we need to be retaining in Irish ownership. Alan Coleman has told me that once you reach a particular turnover threshold, the phone calls come from all over the world in relation to buying out the Irish companies. With the geopolitical situation at the minute and the changed world in terms of economics and trade, it is imperative that we do all we can to retain Irish companies in Irish ownership. This is tax neutral, relatively. The fact that it is not happening, it is tax neutral and ensures that Irish companies stay in Ireland and the workforce have an interest in extra productivity to do that. There is a number of areas that need to be looked at but, as I said, it is tax neutral.

In the area of capital gains tax relief, we would be asking to introduce, as is the situation in the UK, full capital gains tax exemptions for business owners who sell a controlling stake, typically 51% or more, to an EOT. That is similar to the UK model. We would remove discretionary trust taxes to eliminate the punitive taxes applied to employee ownership trust structures, which currently treat them like discretionary trusts rather than succession vehicles. The area of succession is also a difficulty here, where there is no interest within the family in the ownership of the family business any longer. That is where EOTs could come to the fore also.

We need clarity on any anti-avoidance rules. We need to provide clear guidance so that employee ownership transactions are not penalised under existing anti-avoidance legislation. Of course, there also is employee incentives with annual tax-free bonuses being made available. There are also PRSI and USC adjustments.

Essentially, this is a tax neutral proposal, which I believe will give tremendous clarity to companies which find themselves in a situation where they are being approached and bombarded from outside the country by agencies which are only interested in the profit margin that they can achieve by purchasing the Irish companies. I think it would receive cross-party support in general.

As I said, the meeting with the Minister, Deputy Burke, was very successful, and his next recommendation was to square it up by meeting the Minister for Finance in regard to the proposals that are required. I believe it is something that we can benefit from. I urge the Minister to support it.

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